Surviving Peak Oil: Planning, Preparation, and Relocation

This forum provides practical information for individuals and organizations on how to prepare for the impacts of Peak Oil. Although several years will pass before oil depletion undermines vital systems, it is important to prepare for Peak Oil now, before inflation and economic depression limit the choices that individuals and organizations can make in planning to survive Peak Oil impacts. Guest posts are welcome via email.

Saturday, November 28, 2009

Tony Eriksen's "World Oil Production Forecast" represents the most accurate forecast of world oil production, as it is based on "an aggregation of individual forecasts from over 80 countries including over 300 major oil projects."See Wikepedia for an explanation of this method.

"World oil production peaked in July 2008 at 74.74 million barrels/day (mbd) and now has fallen to about 72 mbd. It is expected that oil production will decline at about 2.2 mbd per year as shown below in the chart." [click on chart to enlarge]

Blog comment: As noted on this blog previously, Because oil is used to produce oil, we should focus on net oil production, which is what we have left after oil is consumed to extract, refine, and deliver oil products to market. The rate of decline in net oil production is much steeper than for all oil produced, as shown in Murphy's Figure 3.

Saturday, September 26, 2009

The world’s wealthiest nations, the G20 group, have decided to light a fire but have forgotten a very important detail – to check whether there is sufficient fuel to enable the fire to burn. Historically we have never had global economic growth without a simultaneous increase in the use of energy. This means, primarily, an increase in the use of fossil fuels. For a few nations – China, USA, Russia, India, Australia and South Africa – coal is a very important fuel. However, the most important fuel for the world economy is oil. All nations of the world use oil.

When the economies of different nations are compared, one usually compares their GDP(PPP), Gross Domestic Product (Purchasing Power Parity) per capita. If one furthermore compares how much oil nations use one can see that, since the Second World War, all nations have had to increase their oil use to get economic growth. If we compare how much oil is needed per 1000 dollar GDP (PPP) per person we get a suitable figure for comparison. The amount of oil different nations use varies. In 1980 Sweden, together with the USA, was the worst in the world since we needed the most oil. Nuclear energy and increased use of biofuels have helped us in Sweden to improve but we are still not as good as, for example, France, Germany and the United Kingdom.

During the last 20 years we have had global economic growth of approximately 3% per annum. Fuel use in the form of oil has increased, on average, by half of this rate, i.e. 1.5% per annum. In the future prognoses made by the International Energy Agency, IEA, they believe that we can increase our efficiency of fuel use but we will still need more oil. The documents that resulted from the G20 meeting assume that this fuel will exist to allow future global growth.

To get an appreciation of the scale of the task we can examine the economic growth that the world experienced from 2003 until 2007. In 2003 oil consumption was 77 million barrels per day and in 2007 it was around 85 million barrels per day, i.e. an increase of 10 percent. At the moment consumption is around 84 million barrels per day. If the stimulus package that the G20 group decided on is to generate the same amount of growth as seen in the 2003 to 2007 period then we will need an increase of 8 to 9 million barrels per day during the next 5 years. Such an increase is not possible.

The Global Energy Systems group at Uppsala University has just published an article in the scientific journal Energy Policy (see article) in which we show that oil production from those fields that are currently in production will decrease by 6 percent per year during the next 5 years. This means a decrease in the rate of production by 18 million barrels per day after 5 years. The G20 nations want to increase oil use but the forces of Nature say that there will be a decrease. For the G20 nations to get what they want the world’s oil industry would need to bring online new production of 25 million barrels per day over the next 5 years.

The USA-based company CERA has studied all the projects that the oil industry currently plans to bring online in the coming years. Last summer they arrived at an optimistic estimate that saw 14 million barrels per day of new production. One week ago they revised this increase downwards by 7.6 million barrels per day since companies are now postponing projects.

The same nations that now require increased oil consumption will meet in December with the world’s other nations in Copenhagen. They will then discuss what measures they can take to reduce oil consumption. They do not discuss what volumes of renewable energy will be needed but we have made an initial preliminary estimate and we find that 30 million barrels of oil per day must be replaced with renewable fuels and electricity by 2030 to keep a GDP(PPP) growth rate of 3 percent. What the G20 group should discuss is what investments will be required for this transformation of the energy system to become reality.

"When the report was done, management at NETL really didn’t know what to do with it because it was so shocking and the implications were so significant. Finally, the NETL director decided that she would sign off on it because she was retiring and couldn’t be hurt, or so I was told. The report didn’t get widely publicized. It somehow was picked up by a high school someplace in California; eventually NETL put it on their website. The problem for people at NETL—and these are really good people—was that they were under a good deal of pressure to not be the bearers of bad news -- pressure from people in the hierarchy of the DOE. This was true in both Republican and Democratic administrations. There is, I think, ample evidence, and some people in DOE have gone so far as to say it specifically, that people in the hierarchy of DOE, under both administrations, understood that there was a problem and suppressed work in the area. Under President Bush, we were not only able to do the first study but also a follow-on study that looked at mitigation economics. After that, visibility apparently got so high that NETL was told to stop any further work on peak oil.

Yes, that was terrible. And it was strictly politics and political appointees—I have no idea how far up in either administration (the current one and previous one) these issues went or now go. People in the Clinton administration had talked about peak oil, including President Clinton and Vice President Gore, and the same thing is true in the Bush administration, and the same is true, to the best of my knowledge, in the Obama administration.

The peak oil story is definitely a bad news story. There’s just no way to sugar-coat it, other than maybe to do what I’ve done on occasion and that is to say that by 2050 we’ll have it right and we will have come through the peak oil recession—quite probably a very deep recession. At some point we’ll come out of this because we’re human beings, and we just don’t give up. And I have faith in people ultimately. But it’s a bad news story and anybody’s who’s going to stand up and talk about the bad news story and is in a position of responsibility in the government needs to then follow immediately and say “here’s what we’re going to do about it,” and no one seems prepared to do that.

Peak oil is a bigger issue than health care, than federal budget deficits, and so forth. We’re talking about something that, to take a middle of the road position—not the Armageddon extreme and not the la-la optimism of some people—is going to be extremely damaging to the U.S. and world economies for a very long period of time. There are no quick fixes."

Blog Comment: Dr. Hirsch says that "there’s just no way to sugar-coat [Peak Oil]," but that is what he does. There is no plan or technology for replacing oil, nor is there time or capital to do so. After listening to his speeches, it is clear that his beliefs in America, technology, and the human will distort his scientific analysis. Denial is way of avoiding the horror of the reality ahead.

"Last week, the news was dominated by BP’s announcement on Wednesday that it had made a “giant” oil field discovery called Tiber, 35,000 feet beneath the surface of the Gulf of Mexico. BP did not announce the size of the find, but said it was comparable to other discoveries in the area, leading to press speculation that the Tiber find was on the order of 1-3 billion barrels. Initially the announcement that oil could be found so far below the surface was greeted with much enthusiasm with some stories suggesting that a new era of finding oil was at hand and that exploration in the Gulf would revive.

Within a day reality set in as reporters learned that it was likely to take ten years of difficult and expensive drilling before any oil could be produced and even then less than a third of the oil, and possibly as little as 5 to 15 percent, can be recovered. Given that production from existing fields in the Gulf is likely to start declining rapidly in the next few years, oil from the deep water discoveries is unlikely to be sufficient to increase production from the Gulf.

Production in the Gulf of Mexico accounts for about a quarter of total U.S. oil production, or about 1.2 million barrels a day. Gulf production peaked in 2003 at 1.56 million b/d. Most Gulf production wells tend to hit their peak within a year or two, and then begin to drop steeply several years later. Oil production in federal waters of the U.S. Gulf fell 9.8 percent last year, to the lowest since 1997, as new finds failed to keep pace with declining output from fields discovered in the 1970s and 1980s."

Monday, September 7, 2009

Kate Makenzie at the Financial Times is trying to inform readers about Peak Oil. She counter poses William Simmons with Daniel Yergen, Michael Lynch, and Ed Morse. Readers are left with questions about who is right. Here is my my published comment :

Global oil production peaked in 2008 and is now in terminal decline. The evidence is clear. During the period 2004 to 2008, as oil prices climbed, all oil producers were pumping at maximum effort with historically high oil prices. During this period, oil production remained flat, peaked a bit in July 2008 and then began to decline while oil prices were very high and before the October global economic collapse, as documented here. And the depletion picture is far worse than Simmons indicated, as explained here.

Sunday, September 6, 2009

"It is not in the interest of some IEA member states, in particular its most powerful member, namely the USA, that the agency provides an honest assessment of the situation. Admitting Peak Oil is real also means that you acknowledge our current way of life is about to (radically) change. And not everyone wants the public to know that. Irresponsible, dishonest? Absolutely."

Friday, September 4, 2009

"Last week, four of the world's most outspoken oil aficionados waded into the controversy of peak oil, publishing articles packed with myth and distortion. This "Gang of Four" all claimed the issue was silly, moot, or simply a myth. The four pieces were Pulitzer Prize-winning author Daniel Yergin's seven-page article in Foreign Policy, energy analyst Michael Lynch's three column op-ed in the New York Times, analyst Edward Morse's essay in Foreign Affairs, and scholar Amy Jaffe's paper published by the Baker Institute at Rice University.

Blog Comment: Many Wall Streeters know about Peak Oil. Neil King Jr. at "The Wall Street Journal" gave a talk last year at the annual ASPO conference. Two years ago I sent him my Peak Oil impacts report. He wrote back and said he would read it. I wrote back and suggested that he forward the report to his editors, as it would make writing about Peak Oil easier for him. I have posted my Peak Oil impacts report in comments on financial blogs, including those at "The Wall Street Journal" and "Financial Times," and it has been posted on Engerybulletin.net. Bart Anderson at Engergybulletin.net informed me that this article on Peak Oil and the economy had 3,783 unique page views. Another article on Peak Oil and the economy was likely as popular and has been posed on many blogs. We can conclude that many insiders know about Peak Oil.

Monday, August 3, 2009

"President Barack Obama warned on Saturday it would take "many more months" for the United States to get out of recession even after GDP figures showed the economy shrank only modestly in the second quarter."

Sunday, August 2, 2009

Peak Oil is now, not a decade away as "The Independent" indicates. According to most independent sources, global oil production peaked in 2008. "The Independent" relies on the optimistic IEA for forecasts. But the IEA is NOT an independent agency, as it tends to speaks for global oil and industrial interests. But the IEA indicates that "the oil crisis begins to grip after 2010."

What are your local, state, and federal governments planning for? Chief Economist Fatih Birol at the International Energy Agency warns that “many governments appeared oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted...” Birol sees a supply crunch within the next few years that will jeopardize hopes of an economic recovery.

The IEA is one reason that governments are oblivious. The IEA has been downplaying Peak Oil for years, and still is in saying that Peak Oil is 10 years away.

Sunday, July 26, 2009

"Whether a newbie or seasoned budgeter, nearly everyone has spending holes -- leaks in your budget that drain money with you hardly noticing.

These small drips can add up to big bucks. Once you find the holes and plug them, you'll keep more money in your pocket. That spare cash could be the ticket to finally being able to save, invest, or break your cycle of living paycheck to paycheck.

Here are 20 common ways people waste money. See if any of these sound familiar, and then look for ways to plug your own leaks."

Thursday, July 23, 2009

I have read with interest your Campfire posts pertaining to discussions of acquiring practical skills and techniques particularly focused on food production, preservation and storage. Perhaps this would be an appropriate forum to gain feedback from some of your readers on a few ideas I have for the construction of a root cellar. Below is a picture of the spot I have chosen in which to build this. The soil is heavy clay, slope faces northeast and ‘elevation gain’ is approximately 6 feet. My dog marks the spot where I intend on building a root cellar.

After looking at many designs online, and having one bid ($6000) for a cinderblock constructed cellar, I am thinking an easier and possibly cheaper alternative might be to use 8 ft bunker silo sections. See link attached. http://www.hansonsilo.com/precast.php These precast sections of concrete come in various sizes but I’m considering 6’(H) x 8’(L) for an 8x8 root cellar. Other options I’m considering are poured concrete (pricey no doubt), another old farmer told me ‘in the old days’ they would dig out a cave and line the wall with a thin layer of cement. Additional ideas are greatly appreciated; especially those that cost less and/or are simple enough that I can assist in the construction.

Something like the above would be grand, but likely undoable without premium labor. I'm willing to spend in the $4,000-$6,000 range for a quality permanent cellar and will add my own labor/time to the effort (and possibly my internet addicted boyfriend)

I am also curious to know how many of these skills related to basic needs (e.g. food storage) are still around or if two+ generations of oil/electricity have erased them culturally -even the Amish workers near me didn't know what to make of my cellar request.)

seekers who have stopped looking for work have done so because they simply don't believe they'll find anything. Indeed, the number of discouraged workers nationwide has more than doubled in the past year. This trend won't be reflected in the widely publicized unemployment rate, as discouraged workers aren't included among the unemployed. Still, in states as diverse as Mississippi, South Dakota, and New York, the span of this often invisible slice of workers signals a population losing its hope."

Monday, July 20, 2009

Prescription medicines are usually expensive in the developed countries. In addition, getting the prescription normally requires an appointment with the doctor.

I have found that with the information available on the Internet and mail ordering medications from United Pharmacies -- http://www.unitedpharmacies.com/ -- I can usually save money and time. United Pharmacies does not require a prescription and their medications are of excellent quality. I have always found United Pharmacies to be honest and efficient. And if I need to go to the doctor, I come prepared with symptoms, diagnoses, and prospective medications and treatments.

Saturday, July 18, 2009

Only 14 of the 54 oil producing nations in the world are still increasing their oil production. The era of cheap oil is definitively over, as shown below. Posted on Theoildrum.com with discussion HERE.

Is peak oil real? The BP Statistical Review of World Energy provides the data needed to answer this question. Using the 2009 edition, I have compiled a list of all oil producing countries and regions in the world, along with the production status of each, ordered by year of peak production. BP groups minor producers into categories like "Other Africa", and "Other Middle East", and that notation is used here. All production numbers are quoted in barrels/day.

Only 14 out of 54 oil producing countries and regions in the world continue to increase production, while 30 are definitely past their production peak, and the remaining 10 appear to have flat or declining production [1]. Put another way, peak oil is real in 61% of the oil producing world when weighted by production. Since 2008 capped a record run for oil prices, most countries and oil companies were trying all-out to increase production. While a handful of producers (think Iraq) might be limited by above-ground factors, the majority of producers simply couldn't do any better in 2008 [2].

The evidence of the demise of the cheap oil era has become insurmountable. In the face of the highest oil prices on record, the great majority of the world's oil producers were incapable of taking advantage and producing more oil. Many nations including the US saw their oil production peak decades ago - there simply is no turning the clock back. This list shows that we are relying on a small number of countries to keep providing cheap oil. We need to move faster to alternatives and greater energy efficiency, before the last fourteen peak as well.

Russian Federation - Russia's oil production collapsed by the early 90's as the Soviet Union collapsed, but despite a decade of growth, Russia's own oil execs don't think the old peak can be surpassed.

India's production appeared to plateau in 1995, and has stayed within a steady range since. The EIA forecasts Indian oil production to remain flat or decline slightly in the near future.

Republic of Congo (Brazzaville) hit a production plateau in 1998, though current production is still very close to 1999 peak levels.

Other Central & South America - The remaining countries of the Americas hit a production peak in 2003, though it's still too soon to know if this will be final peak.

Malaysia has been on a production plateau since 1995, and the EIA projects flat or falling production.

Other Africa - Oil production in much of Africa is potentially impacted by above-ground constraints, so it's definitely possible that production will rise here. It will rise from a low base of only 50,000 bpd however, and may not have much impact on total world production.

Nigeria is impacted by domestic insurgencies in its oil-producing regions, and may be able to lift production if the political situation improves.

Chad's oil production history is too short to definitively identify a peak in production, but the drop-off since 2005 has been dramatic.

Italy has been on a production plateau for over 10 years, and it's unlikely that a mature economy is significantly under-exploiting its resource potential.

Ecuador's production grew rapidly until 2004, but has leveled off and declined somewhat since then.

[1] To be considered past-peak, a producer's current (2008) production has to be at least 10% less than its best year, and the best year must have occurred prior to 2005. Some countries' production has been artificially constrained by political and other non-geological considerations. But in some of these cases, it will be difficult to pass an old peak because decades of depletion have occurred since that peak. Iraq peaked in 1979, making it all the more difficult to pass that now.

[2] While OPEC maintains formal production quotas, it is widely believed that only Saudi Arabia had true spare capacity in 2008, while all other OPEC nations were producing at capacity. The truth is unclear, since OPEC nations do not provide detailed reserve statistics for their oil fields.

Thursday, July 16, 2009

"We sit in a period that's popularly (and appropriately) known as "peak oil," meaning that global production of crude is at a zenith that will never again be realized."

"Middle-class life runs on oil. So we should pay rapt attention to things that could cause the price of oil to increase. As the price increases, our lives will indelibly change--and there are plenty of reasons to think that the price of oil will, in the long term, steadily increase."

"We are now looking at unemployment numbers that undermine any confidence that we might be nearing the bottom of the recession. The appropriate metaphor is not the green shoots of new growth. A better image is to look at the true total of jobless people as a prudent navigator looks at an iceberg.

What we see on the surface is disconcerting enough. The estimate from the Bureau of Labor Statistics of job losses for June is 467,000. That increases by 7.2 million the number of unemployed since the start of the recession. The cumulative job losses over the past six months have been greater than for any other half-year period since World War II, including demobilization. What's more, the job losses are now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all employment growth from the previous business cycle.

Next year, state budgets will have depleted their initial rescue dollars. Absent another rescue plan, they will have no choice but to slash spending or raise taxes, or both. The complete state and local government sector, which makes up about 15 percent of the economy, is beginning the worst contraction in postwar history in the face of a deficit gap of $166 billion for fiscal year 2010, according to the Center on Budget and Policy Priorities, and a cumulative gap of $350 billion in fiscal year 2011.

That's bad enough. But here are nine reasons we are in even more trouble than the 9.5 percent unemployment rate indicates."

Blog Comment: Peak Oil is the reason for continued economic malaise. Eventually state and local governments will lack the resources to maintain the highways -- which support maintenance for the power grid. Federal assistance to states will decline as federal revenues decline. Some 70% of federal revenues come from income taxes. Read more HERE and HERE.

Wednesday, July 15, 2009

"When a virulent disease is ravaging you like a cancer, you don't want a cacophony of voices promoting different or contradictory cures. Yet that is what we're starting to hear about the economic crisis, not only from a politically divided -- and pretty scared -- capital, but from within the Obama administration itself. In just the past few days, Vice President Joe Biden has said the young administration misread the depth of the recession -- an honest account, since most private economists did as well. Laura Tyson, an outside economic adviser to the White House, said it's wise to start preparing another stimulus package."

"There are few economic indicators as grim as homelessness, as the Department of Department of Housing and Urban Development demonstrates in its 4th annual report on the topic, which found that some 1.6 million Americans stayed at homeless shelters from October 2007 to September 2008. The Department also noticed some troubling trends: more families seeking shelter — particularly in rural and suburban areas — and more people going to shelters from stable living arrangements (instead of jails, institutional settings or the military)."

Monday, July 13, 2009

Three plans for fuel emergencies have recently been released by UK public sector agencies. This review compares the three plans, highlights certain points from each, and provides internet links to the documents.

DECC's Business Continuity Management for Fuel Shortages (Nov. 08)

Although DECC is now the lead ministry during fuel emergencies, their document is the shortest (10 pages) of the three plans and overlooks some fundamental information which is contained in the other two.

DECC warns that local fuel supplies "could be exhausted within 48 hours of an [extreme] incident and it could take up to 10 days before stock levels are fully restored" (p.2).

DECC's Maximum Purchasing Scheme would limit purchase for non-essential users (ie. the general public) to a maximum of 15 litres (roughly 3 gallons) per purchase.

This appears to be an impractical strategy for two reasons:

History: In USA during the 1979 crisis they limited purchases to a $5 maximum, a similar volume. As Daniel Yergin states, "The results were exactly the opposite of what was intended, for it meant that motorists had to come back to gas stations that much more frequently" (The Prize, p. 692).

Common sense: Citizens who are worried about their fuel supply will continually be tempted to top up their tanks. Topping-up creates line-ups which waste time & fuel and increase tensions at the pumps. As Yergin further points out, “One estimate suggested that America’s motorists in the spring and summer of 1979 may have wasted 150,000 barrels of oil waiting in line to fill their tanks!” (The Prize, p. 692).

Other analysts have recommended a fixed limit, say 30 litres (no more and no less) as a way of preventing topping-up.

In Annex A, this document refers to the Designated Filling Stations (DFS) which “would provide priority access to road transport fuels for defined customers requiring them for a priority use” (p. 7). Curiously, there is no mention of the fact that over 650 of these DFS sites have already been identified (a fact which is mentioned in the two NHS documents which follow).

Having a number of pre-identified sites which will be restricted to defined priority users is prudent planning.

In the aftermath of Hurricane Katrina, health facilities had power and their lights acted as a beacon (literally) for displaced citizens, and this created some security issues for those facilities.

The "Myth of a Central Fuel List" (p. 14) indicates how seriously businesses view their fuel supply and gives a hint of the efforts that people will go to in order to gain preferential access/Essential User status.

This document has several warnings not to underestimate the complexities of a fuel shortage.

The recommendation to "attempt to have all workers try public transport options" (p. 14) of course makes sense, but as US fuel emergency analyst Kathy Leotta (2007) points out, "Transit systems have only limited capabilities for quickly increasing services... due to a small supply of extra vehicles and drivers" (Leotta, p. 4).Switching to public transit will be easier said than done.

Other than its request to ensure that "all unforecasted costs... are captured for audit" (p. 17) there is little acknowledgment of the budgetary concerns which could quickly arise. It seems highly unlikely that any free-market economy could have an extended fuel supply problem without also having an extended price spike.

This document provides a preview of the time and energy which must be devoted to the bureaucratic tasks of identifying, approving, informing, prioritizing, documenting and reviewing. How personnel can reasonably cope with the additional bureaucratic burden (on top of the other practical difficulties caused by a fuel emergency) should be of great concern.

This 21-page plan offers a more detailed look at the complexities of managing the Temporary Logo Scheme (p. 4-5), issues around communicating info to the public (p. 6), concerns about supply chain failures, etc.

Returning to the topic of budgetary problems arising during a fuel emergency, it is puzzling to see no warnings in any of these three documents that pricing during a fuel emergency could prove problematic to their budgets and/or to the service delivery capability of their agencies.

In the Birmingham document, the topic of Financial Implications (Sect. 12.0) is raised, but this section contains only one unfathomable sentence: "There are no significant financial implications anticipated in the implementation of this plan" (p. 13).

Both NHS documents contain some specific and sensible recommendations for personnel, for delivery of services, accountability re fuel use, etc. One would think that this would surely require detailed consultation with staff (and subsequent training) in order to implement these recommendations.

fuel supply and other emergencies must be addressed primarily at the local level, hence the need for local plans, pre-authorization & empowerment, etc.

In North America, meanwhile, there seems to be no comparable activity to raise the profile of fuel emergencies nor to lay preparatory ground-work at the local level.

However, even the UK planners may be placing insufficient emphasis on the ability of a sustained price spike (potentially coupled by a surge in demand for service) to seriously constrain budgets and the provision of essential services.

These three documents offer a preview of a way of life which most citizens have thankfully never experienced: a society where fuel has suddenly become very expensive, where physical supplies of fuel and food may be restricted, where public services are curtailed, and where the overall economy and the public tax base hang in the balance.

The complexities of managing such an unprecedented situation are enormous.

Sunday, July 12, 2009

"The mainstream media and government are communicating that the economy is on a positive track toward recovery while downplaying the likelihood of another economic catastrophe similar or worse than that experienced in the fourth quarter of 2008 and first quarter of 2009. In actuality, there is a significant chance that the U.S. will experience a severe economic collapse, beyond what has already been experienced, either this year or within the next few years. If there is a perceived, sustainable economic rebound before this happens, do not be fooled - the underlying economic problems still exist and will likely eventually surface in economic collapse.

This following analysis further explores this warning by describing:

The 4 key reasons an economic collapse is likely imminent

Why these 4 reasons make the economy vulnerable

Warning signs and triggers to monitor to foresee a collapse before it happens

"The leaders of the west's most powerful countries expressed fears tonight of a double-dip recession and stressed the continued need for emergency measures to boost growth until recovery from the worst post-war global recession was assured."

Thursday, July 9, 2009

"The scale of California's debt crisis - the state is having to issue IOUs as it grapples with a $26bn deficit - has raised some uncomfortable questions for the US.

Is California too big to fail? If so, might the federal government be forced to nationalise it? There are those who believe California should be allowed to fail as a warning to the others. Many ordinary voters are unhappy at bailing out wealthy Californians who enjoyed a luxury lifestyle of sun and sand while their state was sinking."

BLOG COMMENT: For someone who has taught state politics for 30 years, this article is surealistic. Can I really be reading this in a mainstream publication? Am I dreaming? No, tis not a dream, rather it is Peak Oil reality. We are beginning to wake up from a dream, the Age of Oil.

Tuesday, July 7, 2009

"Another quarter gone by. That makes three since the foundations blew out from underneath Lehman Brothers and six quarters since the start of the U.S. recession at the end of 2007. It seems like the negativity is lasting an eternity, and in terms of economic cycles it is. Since the Great Depression, which lasted 14 quarters, the longest recession has been five quarters long, 1981 to 1982. So, at six quarters and counting, the new tag line for our current malaise, 'The Great Recession,' seems appropriate."

Saturday, July 4, 2009

"Several states are facing the prospect of government shutdowns and program cuts as they enter the first weekend of the fiscal year and July Fourth holiday without a budget in place.

'This downturn, even more so than previous downturns, really is affecting every state right now,' said Brian Sigritz, a staff associate with the National Association of State Budget Officers.

'Numerous things look worse than some past recessions,' said Bert Waisanen, a fiscal analyst with the Denver-based National Conference of State Legislatures. 'The housing market is worse. Industrial production is worse. Wages are nearly worse.'

'The sputtering economy has created an across-the-board drop in tax collections. Taxes ranging from sales to personal income to property are all down,' Sigritz said."

Blog Comment: Highway maintenance is the Achilles's heel for modern society. Without expensive and energy intensive maintenance, the highways will fail from bridge collapes, washouts from a lack of culvert maintenance, and land slides. The power grid depends on the highways for replacements of huge transformers and pylons. Each winter, ice storms damage the power grid, and thousands of power company crews on trucks repair the damage. State governments maintain the highways. The Peak Oil economic depression is just beginning to cut into state revenues. As unemployment increases, states will have less revenues from sales and income taxes. As oil supplies dwindle, the price of diesel and highway maintenance will increase. Eventually states will not have enough resources to subsidize home heating and highway maintenance. Without the highways and power grid, virtually nothing will come in from "the outside." The federal government will try come to the rescue, but 70% of federal revenues come from individual income taxes.

Sunday, June 28, 2009

A recent post on this blog reviewed Tony Eriksen's study of declining oil production, which is summarized in this Figure. These data show a slow decline in global crude oil production currently and then accelerating after December 2010.

Because oil is used to produce oil, we should focus on net oil production, which is what we have left after oil is consumed to extract, refine, and deliver oil products to market. The rate of decline in net oil production is much steeper than for all oil produced, as shown in Murphy's Figure 3.

The drop in net oil production will probably be steeper than Murphy forecasts. Matthew Simmons estimates that 100 trillion dollars of investment is need to replace the globe's rusting infrastructure of pipelines, drilling rigs, platforms, and refineries. Much of this investment will consume oil to manufacture, transport, and assemble this infrastructure. And everyone who works on these 100 trillion dollars of projects will use their pay to buy products made out of oil or transported by oil. Currency is a ticket to buy oil. Thus less net oil will be produced than shown in Murhpy's Figure 3.

Friday, June 19, 2009

In this article, Peter Goodchild covers seven years when he and his wife worked to become self-sufficient on four acres in a rural area near Ontario, Canada. Although he concludes that "we learned that it is possible to live with some independence from modern civilization," they depended on modern civilization for much, including a chain saw, bow saw, wood stove, building materials, wire fencing, seeds, and clothing.

After the last power blackout, such things will become unavailable, as he notes himself in another article.

"One in six people in the world — or more than 1 billion — is now hungry, a historic high due largely to the global economic crisis and stubbornly high food prices, a U.N. agency said Friday.

Compared with last year, there are 100 million more people who are hungry, meaning they receive fewer than 1,800 calories a day, the Food and Agriculture Organization said in a report." (CONTINUED HERE).

Thursday, June 11, 2009

"California's government risks a financial 'meltdown' within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.

California's revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.

The state's revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang's office." (CONTINUED HERE).

"Bad loans on real estate continue to push harder on the nation's banks.

At the end of the first quarter, six out of every 10 banks in the U.S. were less well prepared to withstand their potential loan losses than they had been at the end of 2008, according to a new analysis by msnbc.com and the Investigative Reporting Workshop at American University in Washington. Overall, bad loans rose another 22 percent in the quarter as the recession continued." (CONTINUED HERE).

"Home prices in the United States have been falling for nearly three years, and the decline may well continue for some time.

Even the federal government has projected price decreases through 2010. As a baseline, the stress tests recently performed on big banks included a total fall in housing prices of 41 percent from 2006 through 2010. Their 'more adverse' forecast projected a drop of 48 percent — suggesting that important housing ratios, like price to rent, and price to construction cost — would fall to their lowest levels in 20 years.

Such long, steady housing price declines seem to defy both common sense and the traditional laws of economics, which assume that people act rationally and that markets are efficient. Why would a sensible person watch the value of his home fall for years, only to sell for a big loss? Why not sell early in the cycle? If people acted as the efficient-market theory says they should, prices would come down right away, not gradually over years, and these cycles would be much shorter."

Monday, June 8, 2009

A growing number of international geologists and analysts warn of a looming catastrophe with the onset of the decline in the global supply of oil (2). Likewise, reports by several federal agencies, including the US Army Corps of Engineers, point to the need for immediate action, because the foreseeable impacts on our infrastructure and economy are without precedent (3).

Please sign our petition, calling on President Obama and Congress to direct an immediate scientific investigation by the National Academy of Sciences (NAS).

Peak Oil will present our Nation with multiple and continuing crises that will require hard decisions. With a near-term peak, for example, we face the likelihood of shortages of gasoline and diesel fuel, along with the problem of how to allocate limited supplies. Beyond the direct effect on the movement of people and goods, we might well have difficulty maintaining components of our vital infrastructure such as roads, pipelines and the electrical grid. (4).

The National Academy of Sciences is the only source that can provide unbiased and authoritative answers to the questions of how to manage in the era of the “remorseless decline” in available oil and natural gas. The Academies occupy a special place, due to their unique history and mission as the scientific advisors to the Nation (5).

The Academies will have the opportunity to lay out the pieces of the peak oil crises in a clear overview that can provide a factual basis for the emotionally difficult reality we face. We can make our political process work for us to make changes in oil use and energy policy – and influence other nations to do the same…before it is too late.

This complete picture of “peak oil”, along with the Academies recommendations for policy guidelines, can galvanize our top political leaders to dramatically change the course of world history.

Our petition specifically asks for these specific and positive directions, so we will know what constructive actions might be taken at the national, state and local levels on short notice, such as community-based emergency plans and bolstering local food production.

Full text of 'A Petition for the NAS to Study the Decline of Worldwide Oil Production'

A Call to President Barack Obama and to the Congress of the United States of America to Commission a Comprehensive Study of Oil Production Decline (termed “Peak Oil”): Facts, Impacts and Mitigation and Preparedness Options to be undertaken by the National Academy of Sciences (NAS), the National Academy of Engineering (NAE), the Institute of Medicine (IOM) and the National Research Council (NRC).

Whereas, noted governmental, industrial and scientific authorities indicate the Nation and the World face unprecedented challenge and hardships due to the decline of worldwide oil production (1);

Whereas, many of these authorities indicate that time is of the utmost importance (1);

Whereas, many studies also conclude that leaving the problem unaddressed will result in major economic dislocations and the possibility of global economic collapse (3);

Therefore, we, the undersigned, petition the Congress and the President to commission the NAS, NAE, IOM and NRC to undertake a comprehensive, nonpartisan analysis of the facts, impacts and implications of “Peak Oil” in order to advise the Nation on appropriate responses (4).

Further, we request that this comprehensive study be undertaken with speed and with a formal mechanism whereby independent analyses regarding causes, impacts, and mitigation, risk management, and contingency options will be considered by members of the study committees.

1 US Army Corps of Engineers, Energy Trends and Their Implications for the US. Army Installations. Construction Engineering. Sep 05. ERDC/CERL TR-05-21. analysis of “primary issues affecting energy options” and the Executive Summary, p IV, states "Domestic production of both oil and natural gas are past their peak and world petroleum production is nearing its peak." http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=A440265

International Energy Agency (IEA) World Energy Outlook 2008. English Executive Summary, p. 3 “Current global trends in energy supply are patently unsustainable”, and on page 7 “Some 64 mb/d of additional gross capacity – the equivalent of almost six times that of Saudi Arabia today – needs to be brought on stream between 2007 and 2030.” http://www.worldenergyoutlook.org/docs/weo2008/WEO2008_es_english.pdf

4 US Government Accountability Office, Report to Congressional Requesters. Crude Oil. Uncertainty about Future Oil Supplies Makes It Important to Develop a Strategy Addressing a Peak and Decline in Oil Production. February 7, 2007. GAO-07-283. In the Highlights section , “no coordinated federal strategy for reducing uncertainty about the peak’s timing or mitigating its consequences.” http://www.gao.gov/new.items/d07283.pdf

More about the petition

We are dedicated to promoting the understanding of “peak oil” and the interlocking problems that relate to the impending decline in our global energy supply.

We urge a comprehensive, objective and integrated “peak oil” study by the US National Academy of Sciences and the affiliated Academies, to include a study of impacts and policy advice.

We support creative and practical strategies for sustainability, based on the values of civil liberties and fundamental human rights for all people.

Author of blog – Phyllis Sladek. Please note: The best way to reach us is to submit your comments on the blog. You can also send an email to understandingpeak (at) gmail.com.

What can you do?

Our elected representatives need to hear from us about “peak oil”! We want the National Academy of Sciences to investigate the likelihood of “near-term” peak and its impacts. Please tell your friends and neighbors!

Would you like to take another effective action? To reach your Congressperson, copy and paste the petition into this site

Please take a minute to follow-up with a phone call to your Senators and members of Congress. The toll-free number is (866-220-0044.) Let them know you want a “peak oil impacts” study by our National Academy of Sciences – now!

You can also paste the petition into President Obama’s contact page here.

And, you can call and leave your message for the President at (202) 456-1111.

Editorial comment - Phyllis Sladek, coordinator of the petition, welcomes hearing from people who would like to help promote it. In addition, she offers some ideas: "People can download a copy of the petition, take it to a "Transition Town" potluck or other event, then gather, say, ten signatures, and arrange a meeting with their member of Congress. They can take the petition w. signatures to the meeting.

We can also try to get the petition adopted by some of the major environmental and other kinds of related groups.."

Sunday, June 7, 2009

In “Conflict” photojournalist Neil Jackson examines the causes and consequences of ethnic, national, and international violence. He employs 134 of his photographs along with quotations that explain and document his work. The photographs place us where we have better sense of conflict.

This is an important work that will interest anyone who wants to learn about modern history. Knowledgeable historians and astute political observers will be challenged to think deeper about the causes of conflict. Students of history at all levels will be challenged to think about who we are and why governments often act with malice.

Jackson examines a variety of issues and conflicts, including: education; the Second World War; Bosnia; Northern Ireland; Scotland; control of oil resources; British banking and government deception and manipulation in the economic collapse of 2008 and 2009; and the Peak Oil energy catastrophe. We gain a better understanding of modern conflict, the twilight days of the age of oil, and the end of modern civilization.

Education doctrines that date from a century ago to the present explain much about how the western world evolved into patterns of authoritarianism, popular submission, civil war, genocide, international conflict, and atrocities.

We learn how industry, government, media, and the public and relate to values, democracy, authoritarianism, manipulation, power, domination, violence, and war.

Neil Jackson’s work supports a quote in his introduction: “Almost all conflict is about the allocation of resources. People fight in war or in civil society to get a better deal.” His work can also demonstrate that conflict stems from hatred, xenophobia, vengeance, arrogance, authoritarianism, racism, ignorance, and stupidity, as well as from the hopes and dreams of the poor and the young who seek a better life. Neil Jackson can expand his study in many directions.

How is it that the U.S. fell into the trap set by Osama Bin Laden? Despite the recent lessons of the USSR in Afghanistan and the U.S in Vietnam, the U.S. is now trapped in a guerilla war in economically destitute Muslim Afghanistan. The story of David and Goliath is shared by Christianity and Islam. Yet the U.S. does not see that the Muslim world views Bin Laden as David and the U.S. as Goliath.

Revolution is a form of conflict and the Middle East is the world’s tinderbox of revolution. Here, the greatest oil wealth is squandered on the world’s largest indoor snow park and Rolls-Royces while the masses suffer in poverty. What were the motives of the young men who gave their lives in the terrorist attack of 9/11. Were they religious fanatics or do their motives have to do with the poverty of the masses who are excluded from the benefits of national wealth? Did political alienation drive religious fanaticism? Who supplies the elites with weapons needed to suppress revolution in the Muslim world? Did the U.S. imprison and torture Bin Laden’s followers in order to silence discussion of their motives?

War is often folly and many aggressors fail miserably. Adolph Hitler promised Germany a Third Reich that would last 1,000 years, but it lasted barely 12 years. Hitler committed suicide in a pathetic fashion to avoid the humiliation of a trial before the world, including the Jewish people he hated.

Oil is central to Jackson’s study of conflict, and much of the Second World War, Cold War, and the two Bush/Cheney wars are about oil. The very survival of the globe’s population depends on oil. How is it that virtually all of us squandered this vital liquid on automobiles, pleasure boats, suburban living, get-away vacations, luxuries, and vanities? What does this tell us about us?

Neil Jackson’s work evolves as he learns. I will check back from time to time to learn from what he is learning.

Professor Kenneth S. Deffeyes correctly forecasted crude Peak Oil in May 2005. By hindsight we will come to understand the Peak as the plateau between 2004 and 2008.

There are many labels for Peak Oil impacts, such as "crisis" or "long emergency." But these terms suggest major problems for a brief period. Because oil depletion is terminal and viable alternatives are non-existent, we face a global catastrophe which has no parallel in all of human history.

Thursday, May 28, 2009

"I recently experienced one of the most educational periods of my life, as well as one of the more traumatic.

About 5 months ago in the U.S., in the state of Kentucky, we experienced the worst ice storm in our history. It was almost mythic in its destruction, destroying trees, power lines and even structures in an hour after hour ice pile-up which moved over the state like a glacier descending from the sky.

I was made homeless, with the power to my home destroyed, the electric meter sheared from the wiring of the house, and the water frozen and bursted on the north side of the home. The house still sits dark and cold. I was forced to relocate to an apartment some 22 miles away. I left the house at 2AM, using a garbage bag and a flashlight to round up some emergency supplies. When I left the house was 22 degrees Fahrenheit (-9.4 Celsius) inside with water frozen in the kitchen sink and water pipes bursted under the home.

The most important lesson I learned was this: If you are not prepared before the event, you cannot prepare for it during the event. The damage of cold and ice occurs very fast. By the time I realized I could not endure in the extreme cold, saving the house from damage was hopeless. I had stayed under mountains of blankets and wearing a parka and ski sweater and jackets, going to my car every 6 hours or so in an attempt to warm up, but I could not cook food, had no heat and no light, so could not bath or even shave (except for "dry shaving" with a disposable razor, with no way to wash my face afterward) By the time I left the home I was dehydrated, hungry, grungy and cold to the point of it being dangerous.

I know one man who stayed with his wife in his home until his feet began to turn black. He almost lost the feet, and the doctor told him once he made it to the emergency room that he had almost lost his life.

The U.K., like the U.S. has an aging demographic, many with health issues such as high blood pressure, bad circulation, diabetes and heart conditions. A collapse in natural gas/electric production that destroys the ability to heat homes scares me FAR more than any gasoline shortage ever could. The great Kentucky ice storm only proved to me what I had already known, but had not prepared for.

The fact is, the U.S. and U.K. would see great suffering and causalities in an emergency involving major loss of home heating and it would occur VERY quickly, almost before the emergency contingency plans could even be put into play.

If we do not prepare now, we cannot prepare when it happens, it will simply be too late."

According to Railton Frith and Paul H. Gilbert (U.S. National Research Council scientist testifying before the U.S. Congress), power failures CURRENTLY could paralyze a nation for weeks or months. When a widespread power failure occurs, it is difficult to get power working again, as much equipment depends on electric power. For example, diesel and gasoline are pumped by electric motors.

In an era of multiple crises and resource constraints, power failures will last longer and then become permanent. When power failures occur in winter, millions of people in the U.S., Canada, and Europe will die of exposure. There are not enough shelters for entire populations, and shelters will lack heat, adequate food and water, and sanitation. (5) Water purification and water distribution systems will fail, leaving millions of metropolitan residents without water. (6) Waste water treatment systems will fail, resulting in untreated sewage that will contaminate the drinking water for millions of residents who consume river water downstream. (7) Transportation and communications failures will cripple federal, state and local governments — leaving and residents without emergency services, emergency shelters, police and fire protection, water supplies, and sanitation etc. (8) Mechanized farming will cease, and harvested crops won’t be transported more than a few miles. (9) Fertilizer, pesticides, and herbicides won’t be produced. (10) Due to limited farm acreage near cities (much of it destroyed by suburbanization), most cities and towns will be unable to support their populations with sufficient food from local farming (Paul Chefurka). (11) Homes will lack heating and air conditioning. Even if homes are retrofitted with wood stoves, local biomass is insufficient to provide for home heating, and it will not be possible to cut, split, and move wood in sufficient quantities.

Wednesday, May 27, 2009

"Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected, the government warned Tuesday. Social Security will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner, trustees reported.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year, just as it did for the first time in 2008. The trustees project that the Medicare fund will be depleted by 2017, two years earlier than the date projected in last year's report.:

"As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy."

"World oil production peaked in July 2008 at 74.82 million barrels/day (mbd) and now has fallen to about 71 mbd. It is expected that oil production will decline slowly to about December 2010 as OPEC production increases while non-OPEC production decreases. After 2010 the resulting annual production decline rate increases to 3.4% as OPEC production is unable to offset cumulative non-OPEC declines.

There are a number of interesting comments, especially from this comment to the end of the comments.

Blog Comments:

Tony Ericksen provides an excellent forecast for future oil production. But he concludes that "The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining world oil production now to renew the focus on oil conservation and alternative renewable energy sources."

But the development of renewables uses up precious fossil energy and yields electric power, which is not needed. We need liquid fuels for food production and transportation. When transportation fails the power grid will fail from lack of maintenance (that depends on the highways). Solar and wind gadgets will stand idle as monuments to ignorance. The problems with renewables are documented here.

The advice should be that governments, the media, business, and individuals need to focus on preparing for Peak Oil impacts and surviving Peak Oil.

Tuesday, May 12, 2009

On Thursday, March 12, the Johns Hopkins University Bloomberg School of Public Health in Baltimore hosted the world’s first gathering devoted to Peak Oil and Health, with support from the federal Centers for Disease Control and Prevention (CDC) in Atlanta. These are two of the nation’s most prestigious institutions in the fields of public health and health education, and about a hundred people attended in person, with a larger number tuning in to the simultaneous web-cast. The audience was offered a wealth of information about the many ways in which today’s health care services rely on infrastructure and practices that depend upon petroleum. The most likely impacts of Peak Oil on public health were discussed, along with opportunities for public health professionals to prepare for the roles they will play in a post-Peak Oil world.

Blog Comment: The conference provides valuable information. But one conclusion is: "We should begin to devote the remaining oil to ramping up a transfer to renewable energy infrastructures." This is bad advice and misinforms the media, leaders, and the public. The development of renewables uses up precious fossil energy and yields electric power, which is not needed. We need liquid fuels for food production and transportation. When transportation fails the power grid will fail from lack of maintenance (that depends on the highways). Solar and wind gadgets will stand idle as monuments to ignorance. The problems with renewables are documented here.

"NYTimes.com readers are sending in their photos from around the world. How do you see the recession playing out in your community? What signs of hardship or resilience stand out? How are you or your family personally affected? Creative ways of documenting the changes around you are encouraged." Hundreds of photos, arranged by most recent or by topic.

Friday, April 24, 2009

"Slate is turning to our readers and to the Flickr community to find out—we want to know what the recession looks like to you. Please submit photos to this group that capture our perilous economic moment. "

See photos HERE, and look on the site for newly added photos. Periodically, Slate will publish a selection of striking photos from the group in a slide show on Slate."

"The state of our global economy: foreclosures, evictions, bankruptcies, layoffs, abandoned projects, and the people and industries caught in the middle. It can be difficult to capture financial pressures in photographs, but here a few recent glimpses into some of the places and lives affected by what some are calling the 'Great Recession'." (35 photos)

"WASHINGTON – The global economy is expected to lurch into reverse this year for the first time since World War II with appalling consequences for nations large and small — trillions of dollars in lost business, millions of people thrust into hunger and homelessness and crime on the rise.

And the pain won't stop this year, the International Monetary Fund declared Wednesday, for what it said was "by far the deepest global recession since the Great Depression." To cushion the blow and head off further damage next year, the IMF is calling for more stimulus projects from the word's governments, including major spending for public works projects."

"WASHINGTON – The government signaled Friday that some distressed banks will need to raise more cash to meet stricter standards it has set for the 19 financial firms that took its "stress tests" and suggested it's ready to step in with more federal help."

This post provides a good introduction to the challenge of growing food after the last power blackout.

The challenge is greater when we include the absence of all of readily available seeds, tools, wire, shovels, hardware, string, food storage jars, and fertilizer -- to mention just a few of the items that will not be available after the highways and power grid collapse.

Those who are preparing will now store enough of these items to last as long as possible.

Peter Goodchild understands the need to provide both nutrition and sufficient calories. Many Peak Oil gardening websites forget that a minimum of 2,400 calories per person daily is required for 365 day per year for survival. And his post Peak Oil world examines the reality of growing food without the implements of the Oil Age.

Irrigation presents are more challenging obstacle than he indicates. For much of the world, global warming and drought present real challenges to survival. See Globalis (see there: "How to Use Globalis") where you can see how much of the world, including much of the U.S. and Europe receive less and less rainfall every year. Due to persistent droughts, mMost of the U.S. and Europe are not sustainable, that is to say they are not survivable.

Monday, April 20, 2009

Photojournalist Neil Jackson has recently conducted an interview with Dr. Colin J. Campbell, retired -- Texaco, British Petroleum, Amoco and founder and Honorary Chairman of the Association for the Study of Peak Oil and Gas (ASPO). The interview is reproduced here in full.

Blog comments follow the interview.

Neil Jackson: Why is peak oil important?

Colin Campbell: Peak Oil is a turning point for mankind. It is a big subject.

In short, the population only doubled over the first 17 centuries of the last millennium. But then came coal followed by oil and gas, and the population increased six-fold. These new energy sources, especially oil, the easiest, allowed the rapid expansion of industry, transport, trade and agriculture allowing the economy to expand greatly. It was accompanied by the growth of financial capital as banks lent more than they had on deposit, confident that Tomorrow's Expansion was collateral for Today's Debt.

But now we face the dawn of the Second Half of the Age of Oil when supply declines from natural depletion, meaning that debt goes bad (as is already happening) and the economy contracts. Today's oil supply support 6.7 billion people, but by 2050 the supply will be enough to support no more than about 2.5 billion in their present way of life. So the challenges of using less and finding other energy sources is great.

The transition threatens to be a time of great tension : there are already tribal wars in Africa, disturbances in many places including rioting in Greece. Urban conditions will become especially difficult.

Looming lifestyle changes, derelict housing. Ibrox, Glasgow, UK

NJ: What has been your personal reaction to peak oil?

CC: I happened to have worked in the oil industry and I was not alone in being fully aware of depletion for a long time. But geologists are passive people, given to describing rather than changing things. We can describe the Cretaceous but not change it.

NJ: How are you or your family preparing?

CC: I am too old to do much, but live modestly in an Irish village. My wife however is actively trying to introduce allotments here by which people can feed themselves. We do have a solar panel on the roof, providing hot water from about May to October. If the sun doesn't shine I don't wash.

NJ: Do you think the media are playing the issue down? Has there been much coverage of the issue in the mainstream media? Any ideas as to why?

CC: The media is now taking a serious interest : a trail of journalists and TV crews have been here over the past few years. The BBC and no less than Korean TV was here recently. There are of course vested interests (BP for example) keen to suppress Peak Oil but I think the word is out.

NJ: How about governments? Are they playing the issue down, and if so, what examples can you give? Do you think any governments are approaching Peak Oil correctly? Who?

CC: The position of governments is changing. They are heavily influenced by classical economics and badly advised by such practitioners for whom finding oil is just a matter of investment.

The International Energy Agency is the OECD watchdog, although in practice more of a consumers lobby (not wanting OPEC to know its strength). Ten years ago internally it recognised that peak oil would arrive around 2010, but issued no more than a coded message. Now as Peak Oil arrives it changes its tune, for fear of losing credibility, and begins to admit to it under the slogan let's leave oil before it leaves us.

I happen to know the Irish Minister, who understands the position perfectly and is trying to prepare, but he tells me that the political obstacles are very great. It is promising that Obama has renewables high on his agenda and seems to recognise that the attempted conquest of Iraq's oil failed. Oil discovery in Britain peaked in the 1970s and should have alerted the government that the inevitable corresponding peak of production would follow, but Mrs Thatcher believed in the free market, and exploited the resources as fast as possible, which accelerated depletion.

Britain exported its surplus at low prices but now faces rising imports at high prices. Russia now seems to be aware of its power by controlling Europe's gas supply, and will likely try to conserve what is left for its own use rather than export, which makes sense. It is a big subject, and does not exactly give one much confidence in government.

NJ: It is sometimes said that there are billions of barrels of oil reserves locked up in Canada’s tar sands. Can you say anything about these reserves with respect to peak oil? What are the challenges faced when bringing this oil to market?

CC: The resource in the ground of tarsand in Canada and elsewhere is huge, but extraction is slow and costly, yielding a low or even negative net energy return. My guess is that oil prices in the future will range in the $50-100 range as higher prices would dampen demand by economic recession. If so this is a constraint on developing tarsands (some projects are said to be viable only at $90+) ... and indeed restrain the development of renewable energy).

Poverty and the end of suburbia. Benchill, Manchester, UK

NJ: The discovery of oil peaked some 40 years ago – how much oil are we discovering now and what potential is there for further discoveries--new, significant discoveries? Does the Arctic represent another Saudi Arabia? How about the Antarctic?

CC: It is difficult to get good information on recent discovery, but my best estimate is that it is running in the 5-10 billion barrel a year range. The accessible world has now been thoroughly explored, such that all the major productive provinces and large fields within them have been found.

Attention now turns to the deepwater and Polar regions. I think that the main deepwater areas have also already been found : they depend on very exceptional geological conditions as most of the oceans are definitely non-prospective. I do not entertain great hopes for the Polar regions because I think they are generally deficient in effective source rock, and that seal integrity has been impaired by vertical movements of the crust due to the weight of fluctuating ice caps.

There are a few freak occurrences, such as Prudhoe Bay in Alaska, but generally Polar seems to be a gas-prone domain, with sniffs of encouragement that eventually disappoint. It is unlikely to have any material impact on Peak Oil.

NJ: How familiar do you think the senior staff of Western oil majors are with the concept of peak oil? Do they see it as a serious problem either for their business or the wider global economy?

CC: In earlier years, major oil companies did tend to be run by people with exploration experience, for whom peak oil has long been evident (Harry Warman once Exploration Manager of BP was one of the first to publish on it), but now most are run by financiers and engineers, who lack the deeper resource insights. But generally I think they understand.

The Seven major companies are now reduced to four by merger, which is a sign of contraction, and they are selling off subsidiary refineries and marketing chains, evidently recognising that falling supply will give downstream over-capacity.

But remember that the job of managers is to sing to the Stock Market to protect their shareholders' interests under the present system whereby the merits of a firm dividend have surrendered to speculative movements on the Market, which is largely a public relations exercise, as these brokers can have little real understanding of the businesses in which that take positions ("investment" is hardly the word). It is simply not the job of oil company managers to concern themselves with global issues. But that said they do begin to hint and half admit to the obvious truth : Total and Chevron are probably the most forthright, with BP being the least.

NJ: How does oil form, when did it form, where does it form - what does this tell us about the likelihood of finding significant new oil in the middle of the Atlantic... or in the Arctic?

CC: The bulk of the world's oil was formed under special conditions of global warming 90 and 150 million years ago.

Algae proliferated in warm sunlit tropical waters, and the hot surface water prevented normal circulation such that stagnant anoxic conditions occurred at depth. The algal organic remains were accordingly preserved in rifts. On burial to about 2000 meters, it was cooked enough to be converted into oil, which then began to move upwards. Much escaped or was dissipated, but some was trapped at the top of geological structures (arch-like anticlines or against faults).

In addition to these two main epochs there were other local occurrences of little global significance. Naturally, the older the source-rock the greater the chance of loss over geological time.

The crash of supermarket culture. Ibrox, Glasgow, UK

NJ: What is your opinion on reserve growth?"

CC: Assessing the size of an oilfield early in its life poses no particular scientific challenge, although it is naturally subject to a degree of uncertainty. Reporting its size is another matter.

The oil companies were subject to strict Stock Exchange rules designed to prevent fraudulent exaggeration while smiling on under-reporting as commercial prudence. Accordingly the major companies reported only as much as they needed to deliver a satisfactory financial outcome. The resulting upward revisions gave a comforting but misleading image of reserve growth.

Those days are however substantially over as the giant fields offering the main scope for upward revision mature. OPEC for its part greatly exaggerated in the 1980s when they were vying with each other for quota based on what they reported as reserves. The industry has developed various technologies (steam, nitrogen, CO2 injection and horizontal drilling plus sophisticated seismic to map the reservoirs in detail) which can increase the recovery, and hence give reserve growth. But the scope for doing so could easily have been foreseen early in the life of the field, even if it was not normal to report it.

NJ: At the ASPO meeting after the Barcelona conference you were talking about retiring from the newsletter at the end of 2008 - and after around 1000 items. The future plan was for individual national ASPO chapters to produce newsletters, or submit items for someone else to correlate. Is that still going ahead?

CC: Yes, I am a bit undecided about the future of the ASPO Newsletter. Obviously I can't keep doing it for ever, and also the main message has been delivered, so I find myself touching more and more on political subjects on which I lack any expertise.

ASPO has evolved as a loose organisation lacking any normal management or cohesion or rules, but that is a good thing as the different entities can do whatever is appropriate and possible in their own countries. I suppose in one sense the Newsletter does hold them together giving a certain common purpose.

One model might be to rotate the overall direction (including the newsletter), but in practice I doubt if that will happen. In one sense its mission has been accomplished as dealing with life in the Second Half of the Oil Age when everything is in decline calls for very different approaches.

NJ: Are we progressing towards implementing technologies to utilize alternative energy sources at a fast enough rate to prevent an economic collapse, or at least to minimize the impact the advent of Peak Oil is having/will have on the global economy?

CC: I doubt that renewable energies will ever replace oil and gas sufficiently to maintain the past order of things or still less allow economic growth to continue. They are of course greatly needed for the surviving communities.

My own preference is tidal energy to tap the massive regular lateral flows of water. Apparently they can build funnel-like walls on the sea bed forcing the tides to speed up through the constriction, and turn a rotor, generating electricity. But apparently such schemes did not compete with cheap oil and gas so far.

There is of course massive scope for using less energy : turning off all those loudspeakers and TV screens in public places would help.

NJ: What effect do the new technologies have on the projections for when production will peak?

CC: I don't think new technologies will have any impact on the date of peak, which I estimate to have been passed in 2008 ("all liquids"), but they can of course ameliorate the subsequent decline. I think most of the necessary technologies are already well known, so the issue is more about applying them than inventing a magic wand.

NJ: There is a lot of debate about why oil prices were so high during this summer, why they've dropped so quickly since then. What is the explanation for this? Were high prices due to "speculation" as many have argued or was it supply and demand, or both, or something else?

CC: I think that Regular Conventional oil peaked in 2005 and prices began to rise, although the shortfall was partly made up by costly tarsands and deepwater production. The rising price trend attracted the interest of the traders who started buying futures and so forth. It might also have made sense for the industry to keep the tanks full, watching them appreciate in value.

But eventually the rising price had an adverse impact on the real economy and the shrewd traders started to unload, selling short on the futures market. The industry too might have started draining its tanks.

But perhaps more important was the flood of petrodollars that the high prices delivered to the governments and royal families of the Middle East, where it still costs $10-15 to produce oil. They probably sent the surplus to western banks who promptly loaned it out on ever less sure collateral. The petrodollars were not really money in the sense of representing work or barter, but simply profiteering from shortage.

The whole flimsy financial edifice has now crashed, and some of the sillier governments are now pumping yet more fictional money into the system to encourage new consumption. Such policies may briefly succeed, but will only make the subsequent crash worse.

We enter a new world, as the principal energy that drove the anomalous past two centuries heads into decline from natural depletion. This is not necessarily a doomsday message. I have known many simple people in different parts of the world who smiled and laughed not being part of the consumer society.

There are encouraging signs. A BBC film crew who was here recently told me that they had become so convinced of the Peak Oil issue, which they had studied to make their programme, that they had decided to quit the BBC and buy a small farm in the west of England on which to build a simple sustainable future. That was most encouraging, I thought.

The end of the road for one petrol station. Near Derby, UK

---Photojournalist Neil's slideshow, which looks in part at Peak Oil, can be viewed here.

ASPO has been forecasting not only when Peak Oil and Gas would occur, but also how oil production will decline. ASPO could continue to conduct research on future oil production and net oil and gas production. As oil and natural gas production decline, more oil and natural gas energy is expended in extraction and refining processes, and less net oil and natural gas are actually produced. Because the net production curve toward depletion is steeper than the production curves that we see on most all charts, this is an important question. For much deep water oil and gas extraction, the point at which the amount of oil/gas expended equals the amount of oil/gas produced is reached quickly, especially when all of the oil/gas used for manufacturing all of the ships, pipelines, platforms, refineries, parts, their manufacture in factories that use energy, and all of the employee/stock owner salaries/dividends/pensions for all of the companies (salaries/dividends/pensions are spent and use oil/gas), and transportation for all of the above parts and employees.

Dr. Campbell concludes that alternative energies will not make up for much of the decline in fossil energies, and he favors developing tidal energy. My analysis indicates that alternatives and renewables will use up much fossil energy and liquid fuel in their development and yield electric energy, which is not the liquid fuel we need for tractors/combines, trucks, trains, and ships. And objective analysis indicates that tidal energy will not be developed due to siting limitations. And again, it yields electric energy, which is not needed as factories, commercial centers, and offices close.

About Me

Cliff Wirth is a policy analyst who writes, gives Peak Oil presentations, and advises individuals and organizations on Peak Oil impacts, alternatives, survival, preparations, and relocation. He holds a Ph.D. in Policy Analysis and a Master of Public Administration (MPA) degree and taught policy analysis, energy policy, public administration, global urban politics, and Mexican politics at the University of New Hampshire for 27 years. Consider relocating here in the tropical highlands. Email: clifford dot wirth at yahoo dot com. USA telephone number that connects here in Mexico 603-668-4207.